by admin July 10, 2017

George Osborne plans to introduce “150% tax on landlords”. Which concerns all buy to let investors who rent out properties but don't worry we have a good solution for you to beat the landlord tax.

But before I get to the good news here I will explain the not so good news.

If you are a higher rate tax payer then from April 2017 you can no longer claim tax relief on your mortgage interest for your buy to let property. This means it could cost you tens of thousands of pounds per property from April 2017 that you will not be able to offset against your taxable income.

Let's say for example you have a property worth £500,000 and you have a mortgage of £450,000 with a (10%) deposit of £50,000 and an interest rate of 5% on your mortgage per year, so therefore you'll pay about £65,000 for the first 3 years in just interest alone. So what this means now that to reduce your tax bill under the current rules you would be allowed to deduct this money from your taxable income, but from April 2017 you will NOT be able to do this.

Here is the article below in the Telegraph

The result?

This could add possibly add tens of thousands of pounds to your tax bill every year for each property you have a mortgage on. So this new tax which some people are calling an Alice in Wonderland buy-to-let tax which mean this new level of tax could push you into the red.

This new tax is forcing a lot of property owners to consider selling their properties because in many cases this will result in negative cash flow situations because you are paying out more tax every year than you are making receiving.

Here is some more information about this in the government website belowl

So what is the positive news?

The good news about this new tax is that this will not apply to Furnished Holiday Lets.

The tax man considers Furnished Holiday Lets as a business and therefore not an investment. Therefore the rules regarding taxation of businesses are much different to a typical buy-to-let investments. So the good news is that if you rent out your London property as a Furnished Holiday Let, then this means that you can continue to deduct the mortgage interest as an expense.

We specialise in helping many landlords just like you by renting your property as a furnished holiday let in London so if you would like to know more information about this new landlord tax and the financial implications of running a Furnished Holiday Let in London then please contact us today because we would love to help you.

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